UK Autumn Budget 2025: Opportunities for Businesses

Investment Incentives

• Various limits applicable to the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) tax incentive schemes will be increased with effect from 6 April 2026:
  • The annual limit on the amount of EIS or VCT investment that qualifying companies can receive is increasing to £10 million (previously £5m) – and to £20 million (previously £10m) for Knowledge Intensive Companies (KICs).
  • The lifetime limit on the amount of EIS or VCT investment that qualifying companies can receive is increasing to £24 million, and £40 million for KICs (previously £12m in each case).
  • The maximum gross assets that a qualifying company can have is increasing to £30 million before share issue, £35 million after (previously £15m before share issue and £16m after).
• The income tax relief available on VCT investments is reducing to 20% (from 30%), but the income tax relief available on EIS investments will remain at 30%.
• A stamp duty exemption is being introduced for newly listed companies for three years to boost IPO activity: Effective from yesterday, investors will be exempt from paying the 0.5% Stamp Duty Reserve Tax on share purchases of companies newly listed on a UK regulated market for the first three years after their IPO or direct listing. The government is also encouraging investing in listed companies by reducing the annual investment limit in cash ISAs to £12,000, whilst retaining the existing £20,000 limit if at least £8,000 is invested in a stocks and shares ISA.

These measures broaden access to growth capital and encourage investment, particularly for start-up and scale-up businesses. However, the reduction in VCT relief may temper enthusiasm among some investors, so businesses considering raising tax incentivised investment should plan carefully to maximise the benefits.

EMI Scheme reforms

• Various limits applicable to Enterprise Management Incentive (EMI) option schemes are also being increased with effect from 6 April 2026:
  • The limit on the aggregate value of the EMI options that a Company can grant is being doubled to £6m (previously £3m).
  • The limit on the gross assets that a Company issuing EMI options is being quadrupled to £120m (previously £30m).
  • The maximum number of employees that a Company issuing EMI options can have is being doubled to 500 employees (previously 250).
• The maximum period in which EMI options can be exercised is increasing to 15 years - including existing options not yet exercised (previously 10 years).
• The limit on the value of EMI options that can be granted to an individual employee remains at £250,000 per employee.

These reforms make EMI schemes far more attractive for growing businesses, particularly those that are not looking to achieve an exit within the first 10 years, helping them retain talent and align incentives with long-term goals. Larger companies can now benefit but, as always with share option schemes, careful structuring remains essential.

Business Rates

• Permanent, lower business rates for retail, hospitality, and leisure sectors, worth £900m annually from April 2026.
• Transitional relief package of £4.3bn to cap business rates bill increases for businesses affected most by revaluations.
• 40% business rates relief for film studios being extended to 2034.

Although the reduction in business rates is less generous than the temporary reliefs that have been in place since the pandemic, the certainty of still reduced rates is welcome support for sectors under pressure, particularly high street retail and hospitality.

Tax adjustments

• The ordinary and upper dividends tax rates will rise by 2 percentage points from April 2026, to 10.75% at the ordinary rate (previously 8.75%) and to 35.75% at the upper rate (previously 33.75%). The additional rate of 39.35% is remaining unchanged.
• Employer and employee National Insurance Contributions (NICs) will be charged on salary-sacrificed pension contributions above £2,000 annually with effect from April 2029.

Once the government concluded that it would not look to break its manifesto promise and raise income tax generally, more targeted adjustments to certain tax rates were inevitable, and these are two examples particularly relevant to businesses. Early planning, particularly in relation to salary sacrifice schemes for pension contributions, will help mitigate the impact.

Our view

The changes to EIS and VCT requirements open doors for more start-up and scale-up businesses to take advantages of the opportunities for investment offered by such schemes, while the changes to EMI schemes allow for more flexibility for growing businesses that want to incentivise and retain staff through share options.

Meanwhile, the targeted business rates changes signal the government’s awareness of the difficult environment that particular sectors find themselves in, and its commitment to helping affected businesses meet those challenges.  

Targeted tax rises were inevitable in the face of the economic headwinds the country faces, but with strategic planning, companies can turn these business-focused reforms into a platform for expansion and long-term success.